ASML announced on Wednesday (July 15) to investors its intention to increase production capacity by 30% in each of the next two years, increasing its expected 2026 revenue for the second time already this year.
This suggests that advanced AI chip-making machines may no longer be the industry’s toughest bottleneck. This is critical for all companies building data centers and training large models, as ASML’s lithography equipment is at the beginning of the supply chain that feeds Nvidia, TSMC and memory makers.
For months, the limitations of AI technology have been traced back to a single Dutch company. ASML is the only company involved in manufacturing extreme ultraviolet (EUV) lithography machines used to fabricate nanometer-level circuits for memory and logic chips used in modern AI servers.
Semafor claims that ASML can only produce a few units of this equipment each year, creating an artificial limit to the industry’s growth. An increase in production capacity of this kind means that the ceiling will become less important.
ASML expects revenues of between €43 billion and €45 billion in 2026
The numbers indicate a rapid increase in market demand. ASML expects full-year revenue of between €43 billion and €45 billion ($49 billion-$51 billion) in 2026 which is 16% higher than the previous guidance of €36 billion-€40 billion. According to Reuters.
The second quarter saw a year-over-year increase in sales of 21%, according to Semaphore. During the quarter, ASML saw net sales rise to €9.3 billion, with net income of €2.9 billion. The company’s shares have risen by 75% since the beginning of the year and the company also achieved a 3.7% rise, with the price of shares reaching 1,613 euros by 1000 GMT on the day of the announcement.
According to CEO Christophe Fouquet, the expected increase depends on information received from customers. He described the demand for the “chip printing” system as “very strong.” He also added that customers “continue to accelerate their capacity expansion plans,” thus allowing ASML to have greater visibility into long-term orders. Michael Rugg, an analyst at Degrove Petercam, said the quarter showed “amazing” results in all respects.
Where the restriction moves next
Market analysts described the news as something that extends beyond ASML alone. “The easing of lithography restrictions is also a positive for the broader equipment ecosystem, where ASML was seen as a major bottleneck,” Mark Hesselink said in a note cited by Reuters.
If the lithography process is no longer a limiting factor, the focus will shift to the remaining parts of the stack: advanced packaging, high-bandwidth memory, and the power and cooling infrastructure needed to support the data centers that companies like Google and Amazon are building in order to host models developed by companies like OpenAI and Anthropic.
Its client list clearly indicates why ASML’s order book is expanding. ASML supplies UV devices to TSMC, the contract manufacturer responsible for Nvidia chipset production, and memory suppliers Samsung and SK Hynix.
Reports from Semafor indicated that the impressive results achieved by Intel and TSMC could indicate new demand in the future. In conjunction with the earnings call, ASML announced that its High NA EUV technology has achieved a milestone in preparing for production of its first high-volume logic product, meaning the company is now seeking to put its state-of-the-art products into mass production.
Why does ASML have a monopoly position?
Competitors provide ASML space that others cannot cover. There is no competitor to manufacture a UV machine, leaving ASML with no direct competitors in advanced wafer lithography. Nikon and CanonJapanese producers of chip-making machines offer competition in less advanced deep UV lithography technologies, but they do not develop UV. That’s why ASML has a monopoly position and any decision on its capacity could affect the entire chip market.
An important aspect to monitor is whether ASML’s customers implement their announced plans regarding expansion and whether they will place firm orders until the end of 2026 and how quickly the additional 30% production capacity they mentioned will be used. As long as the equipment is not delivered, the forecasts remain just forecasts and nothing more.
What’s next?
Logan Gilland, CFP Wealth Management at Bluespring Wealth and co-host of the DIY Money Podcast, and Nick Reich, CFA and CEO at The Earnings Scout, discuss their takeaways from ASML’s earnings and what it means for AI semiconductor stocks. They talk about what the report suggests for the AI chip business, with Nick explaining that profits couldn’t have been better.
